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AT&T is facing a class-action complaint over its practice of charging a $1.99-per-month "Administrative Fee" that isn't disclosed in its advertised rates.

As the complaint notes, "AT&T prominently advertises particular flat monthly rates for its post-paid wireless service plans." But after customers sign up, the telco "covertly increases the actual price" by tacking on the "bogus so-called 'Administrative Fee,'" according to the lawsuit filed Thursday in US District Court for the Northern District of California.

AT&T "hides" the fee in an easy-to-miss spot in customer bills, the complaint says, and it "misleadingly suggests that the Administrative Fee is akin to a tax or another standard government pass-through fee, when in fact it is simply a way for AT&T to advertise and promise lower rates than it actually charges."

AT&T also provides an explanation "deep within" its website, but this is not an adequate disclosure, and the website description "serves to further AT&T’s deception and scheme by suggesting that the Administrative Fee is tied to certain costs associated with AT&T providing wireless telephone services (interconnect charges and cell site rental charges)," the complaint said.

If AT&T's description of the fee is accurate, "it would merely reinforce that this undisclosed fee should be included in the advertised monthly price for the service because those are basic costs of providing wireless service itself, and thus a reasonable consumer would expect those costs to be included in the advertised price for the service," the complaint said.

AT&T's website acknowledges that the fee is not a tax or required by the government. But the complaint says that AT&T customer bills list the fee in the "Surcharges & Fees" section, which is otherwise used to list "government costs AT&T must pay (e.g. taxes)." This suggests to customers "that the Administrative Fee is akin to a tax or is another government-related pass-through charge, which it is not."

AT&T raised fee despite its costs going down

AT&T introduced the fee in 2013 at the rate of $0.61 per month and has raised it three times. But if the fee was determined by AT&T's actual costs, it should have decreased, the complaint says:

Moreover, on information and belief, the fee is not, in fact, tied to the costs that AT&T’s buried description suggests. This is corroborated by the fact that AT&T has repeatedly increased the amount of the monthly Administrative Fee since the fee was first imposed, while during that same time period the stated costs that the Administrative Fee is purportedly paying for (i.e., interconnect charges and cell site rental charges) have actually decreased according to AT&T’s financial statements.

In all events, AT&T should clearly disclose the Administrative Fee and should clearly and accurately state the true monthly prices for its post-paid wireless service plans in its price representations and advertising. AT&T has failed to do so, and continues to fail to do so.

AT&T's website says the Administrative Fee "is subject to change from time to time as AT&T's costs change."

By increasing the hidden fee, AT&T is able to raise its actual prices without publicly announcing the new, higher rates, the complaint says. AT&T has improperly collected "hundreds of millions of dollars" from California customers by charging this fee over the past six years, the complaint alleges.

Seeking class-action status

The lawsuit was filed by AT&T customers Ian Vianu and Irina Bukchin, and it seeks class-action status for all current and former AT&T customers in California who were charged the Administrative Fee. The lawsuit also asks for a permanent injunction to force AT&T to stop charging the fee, as well as an order forcing AT&T to pay damages, restitution, and legal costs to the class.

People who have been charged the fee can contact Hattis Law, the firm representing the plaintiffs, using this online form.

When contacted by Ars, AT&T said only that "The lawsuit is wrong. This is a standard fee, and we disclose it to our customers."

Hattis Law also spearheaded a pending lawsuit against Comcast over its practice of charging "Broadcast TV and Regional Sports Network" fees that aren't included in its advertised cable TV rates. AT&T charges similar fees on its TV service.

That's American capitalism for you; bombard people with ads about "Only "$RATE" per month*!!" and then, in text so small you need an electron microscope to read it, it discloses the administrative fees, stadium tax, fee processing fees, the fact that it's only for the first year or two, and then starts going up like clockwork, etc.

And some people honestly wonder why there is an ever-growing animosity and distrust of the way things are.

That's American capitalism for you; bombard people with ads about "Only "$RATE" per month*!!" and then, in text so small you need an electron microscope to read it, it discloses the administrative fees, stadium tax, fee processing fees, the fact that it's only for the first year or two, and then starts going up like clockwork, etc.

And some people honestly wonder why there is an ever-growing animosity and distrust of the way things are.

Case in point. I am flying into Portland Oregon. Got a discounted rate for a rental car for 10 days, about $500.00. (Portland is expensive). When searching for the rate I was quoted online a rate of $285.00 for the 10 days. During the booking process the additional fees and taxes amounted to over $250.00. Unfortunately the other car rental companies pull the same stunt.

Greed, the inevitable downside of capitalism, at least as practiced by AT&T and so many other shyster companies. It's no wonder that the big tech companies are getting more and more regulatory scrutiny, they keep finding new and innovative ways to rip us all off.

This fee is the main reason we switched from AT&T to T-Mobile. When I joined my partner's plan it was 61 cents it felt like they raised it more than three times though. When it finally hit $2 is when we made the decision to switch. If I still had any hard copies of those bills I'd join in on this. AT&T was supposed to send us a year's worth of bills as PDFs due to another issue we had after canceling but never did.

It is absurd how awful these major corporations are ran and how long they get away with it.

A bill I'd love to see introduced into the House would be one that requires more truth in advertising.

The bait and switch bullshit that companies do needs to stop. If they advertise a rate, and that rate isn't what people pay, it's false advertising. It's actionable ONLY IF the rate paid is higher, not lower. This way companies can advertise a rate that's higher than what customers will actually pay, but can't advertise a rate that's lower than what customers actually pay.

Make the penalty a refund of the difference plus any associated costs to the customer, plus $10,000 per instance. Have the matter decided by binding arbitration, arranged by the GOVERNMENT, with the only evidence needed being a record of what the customer was told (or an ad) and the bill showing what they got and how much they paid. That would keep complaints from clogging up the legal system and keep costs to the customer low. The loser then reimburses the government for the cost of arbitration, in addition to refunds and penalties.

Once that's in place, expand it to the kind of out of context nonsense a lot of businesses do to get more customers beyond charging higher than the advertised price. (Like those weight loss devices and other bullshit snake oil things that do not work.) It either works for your customer, or you go to arbitration if you refuse a full refund (including any shipping charges incurred).

I'm so fucking tired of the business ripoff. But I expect this won't happen, at least not for another couple of years.

Case in point. I am flying into Portland Oregon. Got a discounted rate for a rental car for 10 days, about $500.00. (Portland is expensive). When searching for the rate I was quoted online a rate of $285.00 for the 10 days. During the booking process the additional fees and taxes amounted to over $250.00. Unfortunately the other car rental companies pull the same stunt.

The rate you see is not the rate you pay.

Just wait till you look up rates on Turo. Last time I rented from them I ended up paying around $20/day in fees. Granted it was still way cheaper.

That's American capitalism for you; bombard people with ads about "Only "$RATE" per month*!!" and then, in text so small you need an electron microscope to read it, it discloses the administrative fees, stadium tax, fee processing fees, the fact that it's only for the first year or two, and then starts going up like clockwork, etc.

And some people honestly wonder why there is an ever-growing animosity and distrust of the way things are.

You forgot the electron microscope rental fee required to read said text, and that you don't always get what's directly advertised either.*

*As in, it'll have an asterisk on a printed ad/billboard, with a link to a website where you can find the exact details.

On April 27, 2011, the Court ruled, by a 5–4 margin, that the Federal Arbitration Act of 1925 preempts state laws that prohibit contracts from disallowing class-wide arbitration, such as the law previously upheld by the California Supreme Court in the case of Discover Bank v. Superior Court.

This is old news. AT&T has been playing that game for years. I remember years ago talking to one of their agents, going over each monthly fee in the bill. My favorite was the $5/month charge for "filling out government forms." They must have had a good laugh when they made up that charge.

I regard AT&T as one of the most dishonest corporations in America. I refuse to give them any business now. That's all we can do.

If they say it's $70/mo, then you pay $70/mo, including all the taxes, fees, etc.

No hidden BS.

ATT/Comcast/et al can go jump in a lake. It is possible to run a profitable company without deceiving your customers.

I'm with you 100%.

That said, Comcast advertised $29.99/mo broadband and that is exactly what I am paying. No hidden fees there either. I have had bad experiences with Comcast in the past and I HATE what they do lobbying-wise as a business. But I have to admit I have not had any specific personal reasons for complaining about their service this time.

AT&T just raised my home internet rate by $5 with no notice - because they can. And yes, the arbitration provisions are fully enforceable under federal law so the lawsuit described in the article is DOA, in California or anyplace else in the US. $45 for 6mbps VDSL (I refuse to call it even "high speed" let alone "broadband") that sometimes, for brief ticks or for certain companies, surges to 12-20. Yes, I could get Comcast, for over $1000 startup charges and $60/month for 10 mbps (because that's what AT&T charges for 12, and there's no competition), and the (should be patented, but that would mean disclosing how they make it so bad) Comcast customer service hell, and the same policies in terms of indeterminate billing changes from month to month.

As for cell service, I've been on Metro since it was MetroPCS using CDMA along freeways only. As a branch of T-Mobile, it seems to work OK, and is certainly much more transparent in pricing than the other big companies. For the same $40/month I've paid for years, they've gradually increased my data cap to where, in my use, I'll probably never hit it (now 10GB).

A bill I'd love to see introduced into the House would be one that requires more truth in advertising.

The bait and switch bullshit that companies do needs to stop. If they advertise a rate, and that rate isn't what people pay, it's false advertising. It's actionable ONLY IF the rate paid is higher, not lower. This way companies can advertise a rate that's higher than what customers will actually pay, but can't advertise a rate that's lower than what customers actually pay.

Make the penalty a refund of the difference plus any associated costs to the customer, plus $10,000 per instance. Have the matter decided by binding arbitration, arranged by the GOVERNMENT, with the only evidence needed being a record of what the customer was told (or an ad) and the bill showing what they got and how much they paid. That would keep complaints from clogging up the legal system and keep costs to the customer low. The loser then reimburses the government for the cost of arbitration, in addition to refunds and penalties.

Once that's in place, expand it to the kind of out of context nonsense a lot of businesses do to get more customers beyond charging higher than the advertised price. (Like those weight loss devices and other bullshit snake oil things that do not work.) It either works for your customer, or you go to arbitration if you refuse a full refund (including any shipping charges incurred).

I'm so fucking tired of the business ripoff. But I expect this won't happen, at least not for another couple of years.

There is a Truth in Advertising law. The FTC is responsible for enforcing it. But it's been around forever and all the companies know 1) how to get around it; and 2) that if somehow they run afoul of it, the FTC doesn't enforce it anyway. And besides, all that it requires is that you not lie about the product. The fee fiddle isn't lying, it's just hiding the truth.

Basically, somewhere, somehow, in print that can be read only with a microscope of some kind, all the additional dealer profit has to be disclosed. The disclosure is usually made available only after you've made commitments that will cost you dearly to unwind - that's fine, as long as it's available to read, somewhere.

Case in point. I am flying into Portland Oregon. Got a discounted rate for a rental car for 10 days, about $500.00. (Portland is expensive). When searching for the rate I was quoted online a rate of $285.00 for the 10 days. During the booking process the additional fees and taxes amounted to over $250.00. Unfortunately the other car rental companies pull the same stunt.

The rate you see is not the rate you pay.

No, that is very different. First, you DO see all the fees before you pay. Second those fees are local/county/state taxes and 'airport improvement fees'. Those don't go to the car rental's bottom line like AT&T's little ploy.

If you showed up at the airport and then were told there is an extra $10 'plate fee' or some such nonsense, that would like AT&T. But that doesn't happen for car rentals.

I some what recently switched to an ATT MVNO and I'm saving more than half what I paying before. So although ATT is still getting my money, I'm not getting bent over a barrel. I would switch to TMO but I've tried them a couple of times over the years and sadly, it's not good in my area.

I switched from at&t to Spectrum Mobile specifically because of these bullshit fees. My monthly bill rose by about $5 in the space of one year, all of it due to fees increasing every 2 or 3 months like clockwork.

That said, for my first few months with Spectrum, they tacked on about $3 worth of fees (despite advertising "no hidden fees"). But about 3 or 4 months ago, the tacked-on fees disappeared, and now they are charging me the exact flat rate that was advertised.

A bill I'd love to see introduced into the House would be one that requires more truth in advertising.

The bait and switch bullshit that companies do needs to stop. If they advertise a rate, and that rate isn't what people pay, it's false advertising. It's actionable ONLY IF the rate paid is higher, not lower. This way companies can advertise a rate that's higher than what customers will actually pay, but can't advertise a rate that's lower than what customers actually pay.

Make the penalty a refund of the difference plus any associated costs to the customer, plus $10,000 per instance. Have the matter decided by binding arbitration, arranged by the GOVERNMENT, with the only evidence needed being a record of what the customer was told (or an ad) and the bill showing what they got and how much they paid. That would keep complaints from clogging up the legal system and keep costs to the customer low. The loser then reimburses the government for the cost of arbitration, in addition to refunds and penalties.

Once that's in place, expand it to the kind of out of context nonsense a lot of businesses do to get more customers beyond charging higher than the advertised price. (Like those weight loss devices and other bullshit snake oil things that do not work.) It either works for your customer, or you go to arbitration if you refuse a full refund (including any shipping charges incurred).

I'm so fucking tired of the business ripoff. But I expect this won't happen, at least not for another couple of years.

I agree & have had similar hopes and dreams. Hotels enrage me the most with "resort fees". I'd also go a step further and say sales tax, occupancy tax, etc. should all be included in any advertised price. Yes, there are uncommon circumstances where some don't pay a certain fee or tax, but why not advertise the out-of-pocket cost to the 95% and let the 5% be pleasantly surprised?

At the end of the day, when most customers end up paying a fee or tax, it should be rolled into the advertised price of any product or service. Anything short of that is deceptive.

Isn't a company billing you for things you didn't order or agree to and which they don't even bother to match with some corresponding delivery somehow ... let's see, the term was just on my mind ... fraudulent?

A bill I'd love to see introduced into the House would be one that requires more truth in advertising.

The bait and switch bullshit that companies do needs to stop. If they advertise a rate, and that rate isn't what people pay, it's false advertising. It's actionable ONLY IF the rate paid is higher, not lower. This way companies can advertise a rate that's higher than what customers will actually pay, but can't advertise a rate that's lower than what customers actually pay.

Make the penalty a refund of the difference plus any associated costs to the customer, plus $10,000 per instance. Have the matter decided by binding arbitration, arranged by the GOVERNMENT, with the only evidence needed being a record of what the customer was told (or an ad) and the bill showing what they got and how much they paid. That would keep complaints from clogging up the legal system and keep costs to the customer low. The loser then reimburses the government for the cost of arbitration, in addition to refunds and penalties.

Once that's in place, expand it to the kind of out of context nonsense a lot of businesses do to get more customers beyond charging higher than the advertised price. (Like those weight loss devices and other bullshit snake oil things that do not work.) It either works for your customer, or you go to arbitration if you refuse a full refund (including any shipping charges incurred).

I'm so fucking tired of the business ripoff. But I expect this won't happen, at least not for another couple of years.

I agree & have had similar hopes and dreams. Hotels enrage me the most with "resort fees". I'd also go a step further and say sales tax, occupancy tax, etc. should all be included in any advertised price. Yes, there are uncommon circumstances where some don't pay a certain fee or tax, but why not advertise the out-of-pocket cost to the 95% and let the 5% be pleasantly surprised?

At the end of the day, when most customers end up paying a fee or tax, it should be rolled into the advertised price of any product or service. Anything short of that is deceptive.

I’m ok with taxes and other government fees being broken out. It’s an important signal that this portion of the transaction is completely out of the control of the merchant. It’s also an important reminder that we all agreed to this and could change it if we so saw fit. Especially things like hotel taxes that are often rolled into things like the stadium finance scam are better off in the daylight than being hidden as part of a total cost.

[soapbox]Taxes are too low. Sales taxes are regressive and too high. Use taxes and fees are situational, but often regressive and bad.[/soapbox]

Case in point. I am flying into Portland Oregon. Got a discounted rate for a rental car for 10 days, about $500.00. (Portland is expensive). When searching for the rate I was quoted online a rate of $285.00 for the 10 days. During the booking process the additional fees and taxes amounted to over $250.00. Unfortunately the other car rental companies pull the same stunt.

The rate you see is not the rate you pay.

No, that is very different. First, you DO see all the fees before you pay. Second those fees are local/county/state taxes and 'airport improvement fees'. Those don't go to the car rental's bottom line like AT&T's little ploy.

If you showed up at the airport and then were told there is an extra $10 'plate fee' or some such nonsense, that would like AT&T. But that doesn't happen for car rentals.

Cities love to stick it to out of town visitors with fees because those people don't vote in the city levying the fees.

That's American capitalism for you; bombard people with ads about "Only "$RATE" per month*!!" and then, in text so small you need an electron microscope to read it, it discloses the administrative fees, stadium tax, fee processing fees, the fact that it's only for the first year or two, and then starts going up like clockwork, etc.

And some people honestly wonder why there is an ever-growing animosity and distrust of the way things are.

I have Wave Broadband, and they charge the same BS $2 administration fee. The only difference is that they put an asterisk in their ads stating that they may charge administration fees, so they get away with it.

Isn't a company billing you for things you didn't order or agree to and which they don't even bother to match with some corresponding delivery somehow ... let's see, the term was just on my mind ... fraudulent?

Isn't a company billing you for things you didn't order or agree to and which they don't even bother to match with some corresponding delivery somehow ... let's see, the term was just on my mind ... fraudulent?

Yes, but it's legal.

Legal only because the company literally wrote the law which regulates their industry.